From the Mouths of Developers

Monday, 2009-07-20; 10:29:17

I know everybody’s sick of hearing about MacHeist, but this entry has been in the making since before MacHeist III ever ended. Before proceeding, if you haven’t already done so, please review my previous four posts on MacHeist: one, two, three, four.

I’ve never been involved as a participant, customer, or developer in any of the three MacHeists. So my most recent post was written mainly from the point of view of a conscientious consumer (although, it seems that some will dispute that assertion), analyzing the value of MacHeist to developers purely on a monetary basis.

After posting, I received a tweet asking me if I had asked the developers themselves about their participation in MacHeist. I had initially dismissed this since this was round three of MacHeist, and besides, I’d probably worn out my welcome even before contacting them. But I figured it was worth a shot, so I fired off some e-mails.

To my surprise, almost every developer that I contacted wrote back, and everyone was actually quite agreeable, despite the tone of my previous post. All of the responses I received were thoughtful. One even wrote back in Italian, and was quite poetic. Each probably represented far more than a few minutes of time out of their day to respond to a troll on the internets. For that, I must say that I am quite grateful.

Although a couple developers asked me not to publish their replies to my initial e-mail, some did allow me to do so. Two developers, Oliver Breidenbach of Boinx Software Ltd. and Gus Mueller of Flying Meat, Inc., also answered some follow-up questions. Andrew Welch, el Presidente of Ambrosia Software, Inc., consented to an extended interview.

The sheer amount of words spent on MacHeist in the following responses and Q&As is pretty extensive. I still highly recommend reading them unfiltered, especially the interview with Welch (in which we touch on the iPhone app store, similarities to retail store promotions, the Tweetblast, protectionism, and even penis sizes). Here’s an executive summary of the main points that were made by developers:

MacHeist is, first and foremost, used for marketing. This is, by far, its main purpose. All of the developers, even the more well-known ones, benefit greatly from the brand and product awareness generated by MacHeist. They are all happy to sell their apps at a substantial discount in return for the sheer recognition that MacHeist creates for their company.

MacHeist is extremely effective at marketing. They do it very well. Time is simply better spent letting the marketers do the marketing.

None of the developers are particularly concerned about saturating the Mac marketplace with their products. Every developer believes that even MacHeist’s reach is a miniscule proportion of the entire market for Mac apps, and that MacHeist helps them reach customers that never knew they wanted their app.

Since MacHeist is temporary and only comes once a year, developers don’t fear that it causes consumers to value their apps less. In comparison, the factors causing the continual push towards 99¢ iPhone apps are always in effect.

All of the apps included in the MacHeist III bundle are fully-functioning, fully-upgradeable apps, just as if you had purchased it directly from the developer.

Welch, in particular, adds some interesting insights:

There is more than one reason to put an app in the bundle. One is to spur awareness of a new product. Another is to attract more users specifically to spur online play of that app.

Ambrosia found it similarly effective to bundle one of their apps on every new Mac, under a deal with Apple.

I will refrain from additional commentary of my own since my opinions already shine through via the questions I posed. Below are the e-mails and transcripts, straight from the devs.

Developer: Zac CohanCompany: Acqualia SoftwareProduct: Picturesque

E-mail Response:

Personally, we think MacHeist is great for consumers and developers and we don’t see them as a middle man, rather more as a marketing service. As you’ll probably know, for indie developers like ourselves it’s hard sometimes to get out there in the marketplace and we generally spend a lot more time on development than we do on marketing.

That’s where MacHeist comes in for us. They put a lot of time, energy and capital into building the MacHeist community, with the missions for example, and get our app out there in front of people. This really brings a lot of value to our company.

Here’s a quote from a comment on your blog post:

“I, for one, would never have thought to purchase Picturesque. for any price. but i’ve been so impressed with it i can definitely see paying for upgrades in the future, not to mention the word of mouth it will certainly receive in my own community.”

Breidenbach: Our experience from past MacHeists is that this [whether consumers might perceive participating apps to be of lesser value after the MacHeist 3 promotion is over] is clearly not the case.

Quite a big chunk of your argument seems to be that the MacHeist guys make more money than the developers.

I think there is no single developer on the iTunes App Store who makes more money than Apple makes with the store. The same with the Apple Stores. If your customer buys a Mac to run your software on it, Apple makes more money on that Mac than you do on the software. In fact, with almost every distribution channel, the channel makes more money on the customer than you. Because the value lies in the customer.

Manganelli: That is a very interesting analogy that I had not considered. You’re right that, in this case, Apple is the middleman. However, what Apple provides is not simply marketing efforts, they provide the actual device on which the apps are created. I think your analogy would be applicable if some other company made the hardware and Apple simply operated the App Store.

In the case of the App Store, it is the sole method by which developers can get their apps to consumers. I would have a problem with this if Apple didn’t provide the actual iPhone. However, they do, and so Apple adds value while taking a cut of the profits.

MacHeist, in contrast, provides no other benefit other than the distribution/marketing of the bundle. Developers can still (and in almost all cases, do) sell their software directly to consumers.

So the problem that I have, as a consumer, is that the value of the marketing effort to me is zero.

Breidenbach: Yes, but they negotiated a damn good deal on your behalf as a consumer. Much like the retail chains Safeways, Walmart, etc., who use their purchase power to give customers and vendors a good deal. If you buy in large volumes from a vendor (like in this case MacHeist does from us) you are usually getting a steep discount. Which we can easily give as multiplication of software costs nothing. If someone came along and would purchase 100,000 licenses of your products, I doubt that you could ask for much more than we get from MacHeist.

Manganelli: The marketing that MacHeist provides does not allow the app to function, and it does not allow the app to function on a different device. So whereas Apple is a value-added middleman, MacHeist is not. That’s why I struggle to accept that my money is well-spent if I purchase the bundle, even if I have to pay more for the apps I want outside the bundle.

Breidenbach: I can assure you that you would get more than your money’s worth and we would be happy to have you as a customer.

[…]

Breidenbach: The hard part about being a Mac developer is to attract customers and the MacHeist guys found a way to attract a lot of customers in a very short time and that is worth a lot of money.

But MacHeist adds to our revenue, it does not take away from it. So clearly we are better off with MacHeist, no matter how Phil and his team profit from it.

Of course we would be much better off if the 100,000 MacHeist customers would give us the full price, but the reality is that most of them would probably never hear about BoinxTV without the marketing efforts of MacHeist.

Developer: Gus MuellerCompany: Flying Meat, Inc.Product: Acorn

Initial E-mail Response:

I actually wrote my post the second after Acorn was announced, beating alllll the other posts on MacHeist, because I knew what was coming.

Anyway, I don’t think consumers will think less of my applications. Did people think less of Delicious Library? Textmate? Speed Download? Launchbar? I know I don’t.

It’s business. I thought the tradeoffs were good for me, at this particular time. I’m most happy about getting Acorn into that many people’s hands. I want people to use it, I think it’s a good app and it deserves to get the attention.

Follow-up Q&A via e-mail:

Manganelli: From your initial response, it seems like you value MacHeist mostly in terms of the marketing aspect. How much importance do you place in the actual revenue generated? What other forms of advertising do you do beyond MacHeist that would inform potential customers about your company/product?

Mueller: Revenue was not as important to me as getting Acorn into the hands of a bunch of people (which turned out to be around 90k folks). Obviously I wasn’t going to do this for free, but money wasn’t the main draw.

The only form of advertising I do is to try and make a great product that people will talk about in a positive way.

Manganelli: Is the version of Acorn you include in the MacHeist III bundle a one-off build or a fully-functional, upgradeable build indistinguishable from your normal app download?

Mueller: Fully functional, and not restricted in anyway. There is no distinction made between buying Acorn off my main store, or through MacHeist.

Manganelli: Are you worried about saturating a lot of your potential market by including Acorn in MacHeist III?

Mueller: Nope. There are a ton of mac users out there. MacHeist really just scratched the surface.

Manganelli: You’ve already indicated that you’re not worried that people who buy the MacHeist III bundle will value your app at a lower value, but aren’t you basically throwing your app at consumers?

Mueller: Well, I might be throwing my app at them- but they are throwing me money back so it’s ok. Granted, it’s not as much as if every one of them had bought my app through my store, but most of these people hadn’t heard of Acorn anyway. I’ve gotten a bunch of emails from people who were pretty happy with getting it, and said they didn’t know it existed.

Manganelli: Do you think that most of your customers don’t think of price as a good proxy for the value of an app?

Mueller: I can’t really answer this, since all I would come up with is a guess and that’s pretty worthless.

Manganelli: I had an exchange with a Twitter friend of mine; he wondered if I would value a Mac Pro less if Apple was offering it at a one-time $10 price to anybody who wanted it for a limited time. My answer would be yes: if the actual retail price of the Mac Pro was $2000 even, I’d probably start valuing the Mac Pro at around $1000 because of Apple’s willingness to basically give away their product. How do you respond to this?

Mueller: If Apple started selling Mac Pros for a limited time at 10 bucks, I’d probably buy 50 of them- they are awesome machines and worth every penny.

Manganelli: Is the MacHeist bundle different from this hypothetical situation?

Mueller: Yes, it is very different. First of all, Apple would lose a ton of money on the sale. Second, the hypothetical you give is just crazy and isn’t based in reality. MacHeist however, is. And finally- I’m not losing any money by putting Acorn on sale. Yes, there was a support spike, but it has gone back down to just about what it was before the sale. And financially, I came out ahead.

Manganelli: A similar problem that iPhone developers have been dealing with is the steady push towards 99¢ apps. In order to get noticed, you need to be on the Top Lists, and lowering the price bumps sales, making it more likely that the app will get onto the Top Lists. With MacHeist, Mac app developers significantly lower the “price” of their apps in order to get a lot of marketing value out of it. How is MacHeist similar or different from the iPhone app situation?

Mueller: I feel like I’m taking a test in highschool with that last sentence!

The two situations are similar, in that the prices are super low.

The main differences are:With MacHeist, I know who my customers are, so I can talk to them later on.With MacHeist, the price point of Acorn changes after 2 weeks.When MacHeist is over, I get to go back to a free market model. I’m not trapped in an App Store.

Manganelli: Personally, I am a consumer who likes to watch where my money goes, and usually that means trying to avoid middlemen who don’t offer significant value to the product that I am purchasing. To me, again, as a consumer, the marketing aspect of MacHeist does not appeal to me and therefore does not offer any value. It doesn’t add anything to the app when I’m using it, either. What reasons do I have as a conscientious consumer to buy the bundle if I want my money to directly benefit the developers of those apps?

Mueller: The money does directly benefit the developers. However, the amount of money given to the developer isn’t the same amount as if you purchase it directly from me. If that makes you feel guilty, feel free to buy the app through my store. Buy 100 copies! However, it’s not like I mind. I actively pointed people to MacHeist while the sale was going on- letting them know that they can get Acorn along with other apps for a great price.

Manganelli: I mean, that’s one of the best aspects of the internet, right? It allows direct connections between people and companies who would ordinarily not be able to interact. Why add middlemen back in?

Mueller: It’s not permanent. And I added the middleman to reach a greater audience.

Manganelli: MacHeist is to indie Mac developers what the RIAA is to musical artists. Is this analogy flawed? Do you see the RIAA as a valuable resource for musical artists? Does MacHeist provide the same value to you as the RIAA provides to artists, or are they different from the RIAA?

Mueller: It’s flawed. I didn’t make MacHeist the sole outlet to get Acorn, and have no contractual obligations to them after the sale is over. The only obligations I was under were to not talk about being in MacHeist before it went public, to not participate in another sale while MacHeist was in process, and to provide “real” licenses for Acorn.

Manganelli: What was your overall impression of my original article? Did it strike you as arrogant for presuming to think of MacHeist as middlemen and for thinking the developers got a bad deal in the long run? From the consumer’s perspective, do you think I have legitimate gripes in purchasing the bundle? (I am not interested in getting sugar-coated answers here. Feel free to be blunt and/or use profanity as I did in my own article.)

Mueller: Well, you called me a “cheap fucking bastard” in your article, which I don’t think I am. You seem very angry about something! I knew exactly what I was getting into when I signed the contract, so I know all the downsides. For where I am with Acorn, the upsides outweighed the downsides. I appreciate your concern though.

Manganelli: How do you feel about MacHeist’s marketing efforts, such as the TweetBlast? There were two iterations of this phenomenon for MacHeist III, and I know I and some of my other contacts are quite annoyed at the MacHeist spam that invaded Twitter because of MacHeist’s efforts. What do you think? Do you mind that your app is associated with such marketing efforts?

Yes, Acorn is associated with the marketing efforts in a minor way- but like all things of this nature, it will probably be short lived. Do you remember VoodooPad being part of MacHeist II? Oh, you don’t? :)

Manganelli: Acorn was released in September of 2007. MacHeist II started in November of 2007, and included Pixelmator, an app that is a sort of competitor to Acorn. Do you have any data on how Acorn’s sales were affected by MacHeist II? I know it may be difficult to assess MacHeist II’s affect, since your app was very new, but any info you could provide on this front would be extremely appreciated (especially if you’re willing to allow me to publish it).

Mueller: I don’t remember thinking that Pixelmator being in MacHeist affected sales, and I’m not even sure how I would measure such a scenario either. I’m very happy with how Acorn 1.0 has sold- it’s certainly done waaaaay better than VoodooPad 1.0 or FlySketch 1.0 ever did.

For me, the point of getting a 1.0 out is to ship something. The improvements come over time, and with that revenue increases.

MacHeist was important to Acorn, because now people know about it. And I’ve had people find VoodooPad through MacHeist and buy that as well. And some day when there is a paid upgrade to Acorn (as I do with all major releases of my products), maybe some of those customers who bought Acorn through MacHeist will send Flying Meat a little bit of cash to use the latest and greatest.

Manganelli: So the chief reason to participate in MacHeist is marketing? Getting the name of your product out in front of customers?

Welch: That is definitely the number one reason. Obviously we made money from MacHeist last year, and it was a reasonable sum of money, but the reality is that the whole event and exposure is worth substantially more. Heck, your article and others like them that add to the controversy are fantastic. The more attention the event gets, the better it is for everyone involved.

Manganelli: I imagine so, yes. ;)

Welch: So here’s the thing. You might think that we’re devaluing our product, and flooding the market with potential lost sales on the cheap. But the reality is that first of all, not everyone who buys the bundle is ever your customer. I can’t say exactly, but perhaps maybe 10% (being generous) of the people who buy the bundle will end up being a customer you end up supporting.

Second point is that all of the attention around the event is just fantastic for getting the word out on your product. This is especially vitally important for smaller developers who otherwise have apps that are not advertised much (if at all). Ambrosia probably gets slightly less benefit than do some other MacHeist participants. But the benefits of such a marketing “event” are huge.

Manganelli: So you mean 10% of the people who buy the bundle actually used Snapz, or 10% of the people who bought the bundle contacted you guys about an issue they were having with Snapz?

Welch: Yeah that’s just a guess, that 10% — but the point is you can’t assume that everyone who bought the bundle a) would have bought your product anyway and b) ends up using your product at all. Neither is the case for the majority people for any particular product.

Manganelli: Right, I understand.

Welch: So let’s take 10% as a figure. In reality, multiply your numbers by 10 to see how a product is being devalued. Then consider the cost of a huge marketing campaign that gets a whole lot of attention, and it’s pretty clear that especially for smaller developers, it actually can be a very smart thing to participate in.

Manganelli: Right. I did some extra calculations in the comments, but those were far more speculative because I didn’t have any reasonable guess for how many people actually use a product they purchased in the bundle.

Welch: We would not be doing this again if it were not a smart business decision. And not just a short-term one, but a long-term smart business decision. Far from flooding the market with devalued sales, we actually found that Snapz sales went up — for a rather sustained period of time — after doing MacHeist. That’s either from raw product awareness generated by the sale, or because of “grass roots” recommendations from people who got our product in the bundle, and recommended it to others. So that’s essentially my take on it — are there any questions that come to mind that I might be able to answer for you?

Manganelli: Yeah, of course. First a few clarifications on what you’ve just said. How do you measure the 10% figure? I don’t need the specific process, but just the method you gathered that data: e-mail support volume, or do you track how many people actually enter the serial number in your product activation dialogs?

Welch: Yeah, it’s part data, part educated guess. We will never know for absolute certainty, and there can be an infinite delay in someone actually becoming “your customer”. But it makes sense, too. Look at the bundle… you probably will see just a few apps that you’d actually end up using if you bought it. That’s the case for most people, and it’s still a good deal for them. If someone who buys the bundle never uses your product, it’s not a support burden, and it’s definitely not a lost sale.

Manganelli: Oh, absolutely, yeah.

Welch: But again, it’s not a sale. It’s a marketing event. It really is.

Manganelli: OK. So Ambrosia, from what I can tell, is one of the more well-known companies that’s participating in the bundle this year. You guys send out PR material and announce stuff on your website, is there any other way that you guys market your products excluding that and MacHeist?

Welch: We do plenty of online and print advertising as well. Full page ads in Macworld magazine, MacLife magazine, The Deck advertising, ads on podcast shows, ads on VersionTracker, ads on InsideMacGames, 404 network ads, etc.

Manganelli: And you still find that after a MacHeist promotion, there are more people buying your products (i.e. a sustained period of more sales), despite the rather extensive advertising you guys do on the web and in print?

Welch: Yes, and I think I can explain why. It’s the same reason why people flock to the stores in droves on Black Friday, and the same reason why places like woot.com do so well. People like to get “great deals”, and can understand and digest them if they come, say, one time a year.

That’s what MacHeist does well: they turn a sale into an event, and get people involved. We could just slash the price of our products for a week, and keep all of the profit ourselves, but we would not get near the number of eyeballs and attention that MacHeist gets from the collective of applications put together, and the whole “unlocking” deal. It’s corny, but it works.

Manganelli: So that whole “unlocking” deal strikes me as a gimmick. Do you think that really affects how many people buy the MacHeist bundle? I mean, wouldn’t it tend to push people away from buying the bundle until those apps have been unlocked, if that’s what they’re really going for?

Or is it just another aspect of publicizing the event (i.e.: when it gets unlocked, they can send out a whole ‘nother barrage of e-mails publicizing MacHeist?).

Welch: It is a gimmick! But it’s a gimmick that your average person who isn’t paying much attention to can understand and buy into. It creates a communual feeling of everyone working together to “get the deal”. Consumer swarming.

Those little red tag “sale” stickers are gimmicks too. But they work.

Manganelli: You mean at regular stores?

Welch: Yes. Christmas sales are complete and total gimmicks. Everyone knows this. But it works, for merchants and consumers as well.

Manganelli: So you see MacHeist as something akin to the “Valentine’s Day Sale” at your local clothing store, only MacHeist is for Mac apps.

Welch: Yes. It’s as manufactured of an “event” as the various holiday sales are. Everyone knows when Christmas is coming. If the stores just tried to do independent sales on their own at random times of the year, it would not be nearly as effective.

They also have spent a LOT of money advertising the event to ensure this happens, BTW: hundreds of thousands of dollars worth. But when they all get together and do it at one time… insta-consumer swarm! ;)

Manganelli: Lol, so, MacHeist is an even better marketer since they’ve managed to create an “event” out of no specific calendar day of the year. It’s just the “two week MacHeist event you don’t wanna miss”. ;)

Welch: Right. That’s exactly how I view it. We’ve done sales on our own too, and they’ve been effective. But no individual company can do a sale on their own, just like no store can do a sale on their own, that will have nearly the power of a collective sale that happens once a year and resonates with consumers.

But remember, we’re not in it just for the sale at all. In fact, that’s not even the primary reason we’re in it. It’s an excellent marketing opportunity to get people familiar with your brand and product that you might not otherwise reach. This is especially crucial for smaller developers who don’t do the type of advertising and marketing that Ambrosia does.

Manganelli: Right, I would think that Ambrosia would be less inclined (but obviously not disinclined) to participate because you guys have more means of getting your product’s name out there.

Welch: True enough. But it is still a very good opportunity for us in my estimation, and given how things went last year, in my experience.

It’s a balance — MacHeist is nothing without apps from developers that consumers want. The developer just needs to consider the cost/benefits of participating. But many apps, especially those that are “under the radar” are also nothing if consumers don’t know about them. Making a great product is only one small part of the battle; you have to let consumers know about the product, and get them to try it, too.

Manganelli: Right.

Welch: As an example, look at “The Hit List”. It’s a great little application, very well designed and implemented. But there are many, many “to do list” pieces of software out there, and for a small independent developer, trying to market an app like this can be very much an uphill battle.

Manganelli: Yeah, absolutely. I think that’s one of the great things about the iPhone App Store: there’s one place where everyone can start looking for apps, and Apple lists every apps that it approves in that store.

Welch: The iPhone App store is even worse. It desperately needs a “MacHeist” of some sort. There’s sooooo much stuff up there, most people never see anything if it isn’t one one of the “top 10” lists.

That’s what promotions are about: getting product in front of consumers that they normally wouldn’t see. Your average person doesn’t cruise VersionTracker looking at new software that comes out daily.

Manganelli: True, but it’s a bit different for the iPhone since there’s only one place where you can ever get apps, whereas with the Mac there’s no central repository. I see what you’re saying, though, about there being so many apps in the App Store that it’s hard to find the smaller ones anymore.

Welch: If I came out with a GREAT To Do list app for the iPhone right now, it would be BURIED. Who would ever see it?

It’s not just that it’s hard to find them, it’s that your average person doesn’t even bother looking. If they do look, they don’t go much past the “top 10” lists. That’s where promotional events like MacHeist come in: a big event that people who would never ever bother spending the time looking for XXX software will get onboard and participate in.

I think if they did MacHeist more than once a year — just like if stores tried to do Christmas sales more than one a year — it would severely dilute its effectiveness in the minds of consumers. Just as people look forward to the Christmas sale every year, they also look forward to MacHeist.

Manganelli: Right, I get where you’re coming from. But for the iPhone App Store, you can just go to iTunes and search for “to do list” and get right to what you’re looking for, and the results aren’t biased towards the more popular apps, as far as I can tell.

Welch: The average person doesn’t even know they necessarily want a piece of “to do” list software, though. And I think that’s the case with many apps in the MacHeist bundle. People may not know they want or could use something until they see it. MacHeist is an event that makes them see it.

Manganelli: So I guess my own qualms with buying the MacHeist bundle sort of rest with something that I ranted about last year, that MacHeist seems to be profiting the most from the bundle and the developers don’t see much of the money. I understand the terms have changed this year (e.g.: developers get a percentage cut rather than a flat rate). But since you see MacHeist as primarily a marketing event, you would have no problem with MacHeist taking most of the money from the sales? That is, since it’s a marketing event, the marketers should get the most profit?

Welch: Last year it was a percentage too, btw. So this isn’t a change for this year.

Manganelli: Ah, OK, my bad. But regardless of whether developers get a percentage or not, I guess the question still stands — since you value it more as a marketing event, it’s OK for the marketers to get the most money?

Welch: MacHeist is a marketing event — but like any marketing event, the idea is that the money you pay for the marketing/promotion ultimately ends up with you profiting somewhere down the line. It would entirely depend on the product in question, its life cycle, where it stood in relation to competition in the market, etc.

We don’t lose any money by having our product be part of the bundle except for sales from people who would have bought our product already, but instead bought it from the bundle. Are there some of those sales? Sure. But our goal isn’t to reach frugal consumers, it is to reach a broader base of people who might not have seen our product, or known that they had any use for it.

Manganelli: Lol, OK. I have two more questions, but I’m already starting to anticipate your answers based on how you’ve framed MacHeist (a marketing event, rather than primarily focused on sales).

Why don’t you band together with other developers and push a bundle deal yourselves? I imagine the answer is because MacHeist has the dedicated resources to create a better marketing event since they’re focused on that, and so it’s far more valuable and a better use of your time if you leave the marketing to the marketing professionals, i.e.: MacHeist.

Welch: You’re correct. We participated in such an event a few years ago (which I believe was a direct response to the perceived “badness” of MacHeist). Because of relative lack of promotion, the event, and thus the sales, were relatively anemic.

Manganelli: OK. And how come having a yearly sales event like MacHeist doesn’t cause normal Mac software prices to be pushed to bargain-basement prices? That seems to be one of the main problems with the App Store — that apps need to push their prices down so that they gain publicity, and in the process consumers expect to pay 99¢ for an app. How is that different from MacHeist?

Welch: The same reason why Christmas sales don’t cause consumer goods prices to crash through the floor. It happens just once a year, and people know it is an atypical situation (which makes them all the more interested in getting involved in it so they don’t miss the deal). This is also why I think if they ever did MacHeist more than once a year, it would severely dilute its effectiveness.

Manganelli: OK, that makes sense. I guess my opinion largely came from thinking of MacHeist as a sales event rather than a marketing event.

Welch: I can absolutely understand that perspective. I just think it is only a small part of the story. We’ve been in business for over 15 years; I’m definitely not interested in just a short term sales bump so I can take a trip to the Caribbean. That’s not what building a sustainable business is about.

Manganelli: So the marketing/promotion part is the main reason why you participate, and the actual revenue you generate is icing on the cake.

Welch: That’s exactly how I see it, yes.

Manganelli: Mmk, makes sense.

Welch: With the caveat that you need to look at a particular product to see if it is a good fit for a promotion like MacHeist. Some products are not.

Manganelli: So products that have been on the market for a while and maybe are at the end of the life aren’t suited to MacHeist, since there’s probably not as much effort put into marketing/promotion of that product anyway? i.e.: you’d get a better return on your “marketing investment” with a product that needs wider recognition.

Welch: What is MacHeist? It’s an event-based promotion, essentially a fabricated national holiday for Mac users. If you offer a product in MacHeist, you sacrifice some immediate sales revenue for broader awareness of the product. What products does it make sense to make this sacrifice for?

There are many types of products that it might make sense to make this type of sacrifice for. We’ve done similar things in the past where Apple bundled a copy of our products on every Mac that they sold. We were paid very little for every computer sold, but they sold a lot of computers.

Welch: We viewed that in a similar manner, not as an immediate source of revenue, but as a great way to broaden awareness for our brand and products. We received far, far less from Apple per computer sold than from MacHeist per bundle sold. What’s the difference?

Manganelli: Far, far more awareness since it was on every Mac that Apple sold (or at least all of a specific model).

Welch: Sure, but the idea — and the sacrifice you make — is exactly the same. You’re selling your product for far less than list price, and in return you’re reaching people you normally might not have reached, and broadening awareness of your brand/product. Same exact thing.

Manganelli: Right. Can you make any comparisons between how effective MacHeist II was compared to the bundling that you did with Apple?

Welch: Effective in terms of…?

Manganelli: Well, I guess in terms of awareness of your company and other products? Do you see sales bumps for other products when you do a promotion like MacHeist or Mac bundling?

Welch: Keep in mind that this type of thing is not an exact science in terms of measuring the results. A certain amount of advertising/marketing can be really well measured, but many incidental aspects of it just cannot.

For instance, you got Deimos Rising on your Mac. Maybe you never would have bought it other wise, but you liked it, and told a friend about it, or some friends saw you playing it, and decided to get it too. How do you measure that? The answer is you can’t, really.

Or maybe prior to Deimos Rising, you’d never heard of Ambrosia, and went to check out what other games we had. Something that you would not have done if it didn’t come for free on your Mac. Again, how do you measure it?

Manganelli: That’s true, but ultimately me telling my friends about Deimos Rising will translate into some portion of sales, right?

Welch: What I can tell you is that overall, we saw sales of bundled products go up after doing both the Apple bundle, and MacHeist. I honestly don’t remember the numbers for the Apple bundling, so I can’t give you a direct comparison. It’s been a while since they bundled it.

Manganelli: OK, no problem. But it was still a useful/worthwhile endeavor for Ambrosia to bundle Deimos Rising with Macs.

Welch: Yep, I’d do it again for sure.

Manganelli: One other question now that I think about it — this was never very clear to me, but is the version of Snapz Pro that you included in MacHeist II (and WireTap Studio in MacHeist III) exactly the same as what you would get if you purchased it directly from Ambrosia’s website? i.e.: you’d get the exact same registration system, etc, and you can upgrade it to future versions subject to the same terms as a normal purchase?

I heard some people say that you got one-off un-upgradeable builds from the bundle, and other people contradicting those reports, and others saying that MacHeist asked for registration systems to be taken out… what’s the deal with that?

Welch: Yes, the versions we’ve included in the MacHeist bundle are full versions of our products, fully supported by us, entitled to all of the upgrades, etc. I believe this may vary from developer to developer, but I think developers who made the choice to limit the benefits of getting their product in the bundle may be being a bit penny wise but pound foolish.

I think there was an effort this year for the bundle to ensure that only full versions were included in the bundle, but I don’t know for sure that this is the case for all of the products included, so don’t hold me to it! ;)

Manganelli: Hehe OK.

Welch: All I can say is that for our products included in the MacHeist bundles, they are full-on versions of Snapz Pro X and WireTap Studio.

Manganelli: OK.

Welch: BTW, I think it’s fine that some people don’t like MacHeist, or think it’s a bad idea, etc. It’s very possible for reasonable people to disagree; I just wanted you to understand some of the reason why we felt that participating in MacHeist was a good idea for Ambrosia.

Manganelli: Yeah, your responses have definitely given me a different perspective on this whole thing.

Welch: Cool. It’s all good. For some developers and some products, MacHeist might not be a good idea. For others it is. It’s definitely a good deal for consumers, and some money going to charity, especially these days, isn’t a bad thing either.

I don’t think any developers in the bundle are being “fooled” into it. They may not have the same reasoning I do for being part of it, but I do think they are going into it with both eyes open.

Manganelli: Oh, right, I didn’t think that developers were being conned into participating, I’m sure you all knew what you were getting into. It just seemed, from my perspective, in the long run it wasn’t such a good deal; whereas the real value in MacHeist seems to be the marketing, which I don’t particularly value as a consumer.

One of the other unstated assumptions that went along with my post, I think, was that buyers of the bundle only really wanted one or, at max, two of the apps. This is certainly the case for me personally for any bundles that I’ve seen. So it struck me as a little weird that people would pay $39 to be split up among developers, MacHeist, and charity, rather than paying a little more and supporting the developer directly with a lot more dollars. But if buyers would like to try out some of the other products in the bundle, I guess I can see where added value comes in if that person recommends the app to someone else.

Welch: Well, that’s really the strength of the bundle, though. Every person who looks at it will only be interested in a few of the apps, perhaps (at least initially). However it will be a different few apps for each person. This is how much stronger the bundle is as a collective than it would be on its own.

But the more important point is the event that is MacHeist that causes people to look at these apps at all. You are fairly savvy as a Mac user, but I reckon there have to be some apps in the bundle you’ve never seen before, or if you had, you never downloaded to look at them.

Imagine how it would be for the average person who isn’t as savvy. They’ve heard of (maybe?) one app in the bundle, if they are lucky. So the huge event/sale that is MacHeist draws in eyeballs that we as developers might never have had.

Manganelli: Right.

Welch: Getting noticed is huge for any business. Billions are spent every year just on getting noticed (marketing).

Manganelli: Right. There are some apps in the bundle that I haven’t heard of, Kinemac and BoinxTV for example, but really the only one that I would consider purchasing the bundle for would be WireTap Studio, and I already have that.

Welch: I hear ya. But it’s so cheap. Can you resist? :D Haha.

Manganelli: Haha, I’ve done so two years running. ;) I confess there was one bundle that I bought a long time ago. It was a “Mystery MacZOT 5”, and it was 5 apps for $5, but you didn’t know which apps. I figured I’d give it a shot — when they were finally revealed I didn’t need any of them, and haven’t used them since. :P

Welch: THE TRUTH COMES OUT! ;)

Manganelli: Don’t worry, I’ll definitely be editing that out of the transcript. ;)

Welch: Covering your tracks. Wise.

[…]

Welch: Some other developers may not even realize that MacHeist is a marketing event and not a sale… but they just aren’t aware of what it really is. If they view it just as a way to ring the register, they probably aren’t seeing the big picture IMHO.

Some of the smaller developers that are included, they are getting absolutely fantastic exposure that they wouldn’t get otherwise. Huuuuuge.

Manganelli: Yeah, no kidding. I do have to say that MacHeist knows how to get people interested.

Welch: And people pay advertising firms a LOT of money to get eyeballs like that. Consider how TV advertising is structured. The stations charge for ads based on the number of eyeballs they reach.

Manganelli: Yep.

Welch: It is what it is. What can I tell you, some people hate Christmas sales too. ;)

Manganelli: Lol, I’m personally not too fond of going to the store/mall when there are hordes of people around. :P

Welch: Yeah me either, so I buy stuff online when they do their Christmas sales.

Manganelli: Hehe so what you’re saying is that I should be more inclined to participate in MacHeist than the normal Christmas shopping event? ;)

Welch: Do whatever your conscience guides you to do. ;)

Manganelli: Ever the eloquent speaker (writer?). ;)

Later, after the MacHeist III promotional event ended:

Manganelli: So I saw that Multiwinia is another Ambrosia app that you can get if you promote the MacHeist bundle to others. Was the reasoning to do that the same as including WireTap Studio in the bundle? You wanted a lot of recognition for Multiwinia which is a relatively new Ambrosia app?

Welch: No, it was entirely different, really. Multiwinia is a great game, but like all online games, it lives or dies by the depth of the competition available on the ‘net. We decided that it’d make a lot of sense to get a lot of copies of Multiwinia in people’s hands via this promotion to “snowball” the online gaming aspect of it.

Manganelli: Ah ha. That makes a lot of sense. I’ve seen Ambrosia apps (like pop-pop, although that’s old) have multiplayer aspects but not very many participants. Is that also why you included pop-pop as well? For the refer-a-friend deal?

Welch: pop-pop in is hayday had a lot of people playing it — perhaps this give-away will revitalize that. But every game has a lifecycle, people stop playing games eventually.

Manganelli: Right.

Welch: I personally really like pop-pop, and I hope a bunch of people start playing it again. :)

Manganelli: Yeah, me too, I’m glad it made the jump to Intel and Windows. :)

How do you feel about MacHeist’s TweetBlast promotion? I know there is a lot of resentment on Twitter (or, there is from what I can tell) about them basically getting bundle purchasers to spam their Twitter followers to get a couple more apps, one of which is Multiwinia. What do you think about that resentment? Do you feel Twitterers in particular might not want to deal with Ambrosia because you guys directly benefitted from the TweetBlast?

(From what I can tell, you don’t use Twitter so I don’t know if you personally have seen any resentment.)

Welch: Well, I think if I had to make an analogy, I think I’d say it is a lot less like “spamming” and a lot more like grass roots campaigning. In other words, the Tweetblast was sent out by a lot of individuals who had something to gain to a relative few people each (those who followed them). Whereas spam is sent out by one person/entity to the masses.

I will grant you, though, that grass roots campaigners can be equally as annoying as mass mailings. Especially when they knock on your door during the day and ask you political questions. ;)

Manganelli: True, but the result is the same. As an example, I saw 5 or 6 tweets that were the same character for character, and the effective reach of the TweetBlast is the same as a mass-marketing e-mail.

(For what it’s worth, I unfollowed anybody who posted that tweet, but I suppose it’s not really a lost purchaser of the bundle for you. :P )

Welch: If someone dies in manslaughter or murder, the results are the same — but it is viewed in a very different light. I’m really on the fence about the Tweetblast concept. I understand how it is annoying and intrusive. But it’s also something done on a voluntary basis by an awful lot of people.

Manganelli: I think that’s a bit of a straw man [the manslaughter vs. murder analogy]. It would be more like the difference between someone personally killing another and someone ordering a bunch of his minions to murder a person. In either case, the man at the top should be held responsible, no?

Welch: I have a friend who asks me about buying Mary Kay products for my wife from time to time. I don’t mind that the same way I do the “penis enlargement” emails I receive from spammers. And for the records, I’m comfortable with the size of my penis, thank you very much. ;)

Manganelli: Can I post that publicly? ;)

Welch: Sure.

Manganelli: Well, in any case, that situation is also different because it’s someone organically telling someone about another product. It’s not Mary Kay directing to this person exactly how and when to say it, and offering goods in return.

I mean, I would be far more charitable to the TweetBlast if, at the very least, there was a way for them to accept any form of tweet as long as it mentioned “MacHeist” and “Delicious Library 2”, and not a specifically crafted tweet.

Welch: I do think that the Tweetblast was somewhat of an abuse of the power of Twitter. But it’s been done before, in political campaigns here in the USA, they would organize mass tweets too.

I guess what has me knotted up about it is that yes, I can see how it would be annoying. But it’s also thousands of people doing it on their own volition to get the word out about something they care about. Isn’t that was Twitter is all about? Do we really say to Twitter users “No, you can’t Tweet that”?

Manganelli: That is what Twitter is about, and no, we don’t say that, but it’s the way that they went about it. I don’t have a problem with people expressing their opinions about MacHeist, for example. And isn’t that just as effective as a TweetBlast?

Welch: Well, it’s really just a high-tech version of “refer friends, and you get a discount or benefit” — a marketing technique that has been used for centuries. It’s just hyper-effective in this modern age.

Manganelli: I can see where you’re coming from regarding political campaigns, but just because politicians do it doesn’t mean it’s right. In fact, it may be quite the opposite. Well, I kid, I’m not that cynical.

Welch: I agree with you on that. In fact in general, if politicians do it, it’s probably wrong. ;)

Manganelli: Well as with all things internets, things that become more hyper-effective also get hyper-annoying. I would think that marketers would need to adjust to the realities of the internets and make sure tactics are less intrusive to compensate.

Welch: But it’s not really politicians doing that, it’s people who support those politicians who are willingly doing the grass roots campaigning. It’s still annoying and intrusive, but if that’s what they want to do…

Manganelli: Yeah, I suppose. And I do have an inherent bias against marketing and MacHeist, so I won’t press that any further. I think I’ve mined all I wanted to out of this line of questioning. ;)

Welch: I think something the MacHeist guys do is they push the boundaries of marketing concepts using the new tools available. Sometimes they hit a home run, and sometimes they pee in people’s cornflakes.

I can absolutely understand the outrage regarding the Tweetblast, and really, we’re not benefitting much at all from it. The give-away is almost inconsequential in terms of revenue.

Manganelli: Right, but you do benefit from the increased number of users in the online play, hopefully anyway.

Welch: Possibly. My expectations are not terribly high for that, but you’re right, that is a possible benefit to us.

Manganelli: Okie.

Welch: If you want to ask me the real question, that is, would Ambrosia do something like this on our own to promote our products, the answer is no. We would not. I’m not sure if that’s good or bad.

It’s good in that we wouldn’t be pissing off the same people who are mad about the Tweetblast now. But perhaps it is bad in that we’re not exploring the new frontiers in promotion.

Manganelli: What was your general impression of my article in the first place? (Not really interested in candy-coated opinions.) Did it strike you as arrogant for saying whether the deal was bad in the long run and for calling customers tightwads?

Welch: I enjoyed the article actually. My overall impression was “He’s not realizing that MacHeist is a promotional event before it is a sale” and then the issue about tightwads. I think everyone is always looking for a deal, especially in this economy. But I thought it was a clearly and passionately written article, and so I enjoyed it.

Manganelli: FWIW, I got a ton of flak in the comments, but all the e-mail (which has been a grand total of about 5, thank god) I got was positive and/or constructive, except one. Yeah, the economy aspect didn’t occur to me, which I think is one reason for the strong backlash.

Welch: Let me give you an example. My wife wanted a treadmill. Don’t ask me why, we live on 17 acres, and right next to a walking trail that lots of people run on. We have about 5 months out of the year that are really nice outside here, though, and we have a newborn baby she’s looking after, so she wants to be able to run in the house.

So fair enough, I do the research, and I realize that a good quality treadmill — nothing too extravagant — is going to be between $2,000-$3,000. That’s not cheap at all.

So I find a company that makes the “Mercedes of the treadmill world” and find that they have an $7,800 (!!!) treadmill that they sell factory reconditioned for just $2,700. Great deal, says I, let’s get a Mercedes for the price of a Honda, by buying it used instead of new.

I order it, and I receive a call from the company saying that they didn’t have any used models of the one we ordered. They’d errantly left it up on their web site, so they were sending me a new one for the price of a used one, with a full 10 year warranty. Am I a tightwad for wanting to pay a lot less for something of good quality? I guess, but I thought myself rather clever getting this deal on a reconditioned model :)

Manganelli: That’s been one of the big criticisms of my article. Here’s how I would respond:

I mean “tightwad” in the “conscientious consumer” sense. I think my article can come off a little arrogant because of this aspect too, but I do consciously think of where my money goes. For example, I used to visit a mini-golf place here in CA called Golfland, and I stopped going there because they donated $1000 in support to the effort for Prop. 8. It’s similar when I get a good deal from a company; I like to thank them profusely and send an e-mail to a manager if I got particularly good support from someone, and I make sure to give glowing recommendations to other potential customers (this happened just recently with a T-shirt company that I used). So when I say “tightwads”, what I mean is that people don’t think about how the money would affect the developer. There’s a difference between a company giving a good deal to a single customer, and a company giving an insane deal to tens of thousands of customers.

So I don’t inherently have a problem with people going out and seeking a good deal on other products. It’s just that when participating in MacHeist and buying the bundle (or, for example, when participating in the TweetBlast), the customers are not thinking of the full ramifications of their money or actions.

Does that make sense?

Welch: Yeah, let me respond. I think that you’re trying to be a nanny to the developers a bit too much. Developers know what they are getting into, the consumer shouldn’t have to think about how it is or isn’t affecting them IMHO. But I’m with you on the Tweetblast thing, I can see some people not supporting MacHeist if they are offended by it.

Manganelli: Part of it is the portion of money that goes to developers, and part of it goes back to something we talked last time about money going to MacHeist, which is essentially a middleman that provides no added value to the app to me as a consumer. So “tightwads” in the sense that purchasers may not have considered the ramifications of the money/actions, so they’re really only interested in getting a good deal. But I’m harping now.

I suppose I could be overthinking this too much in where the money goes, but it still just irks me a bit.

Welch: Aha, but see, MacHeist does add value. Enormous value, in fact. They spent about $400,000 promoting MacHeist 2009, with a team of 15 people working on the project in various capacities. Any idea what it’d cost to hire a PR firm to do similar promotional work for you? :)

Manganelli: Oh, yes, of course. I meant “added value” to the app in particular. As in, I don’t get any more functionality having purchased the app through MacHeist than I do through your normal sales channels. We touched on this previously; I can see how MacHeist’s marketing efforts are extremely valuable to the developers.

Have you seen any effect of MacHeist III on sales of Snapz Pro X?

Welch: Too soon to tell, and many factors are at work. We’re working on major new versions of that product anyway, so none of that really matters to me.

Manganelli: OK, that’s cool. I was just wondering; I’m trying to see if sales of apps through bundles were gaining new customers to the app space rather than cannibalizing sales of other similar apps. That’ll be pretty hard to figure out.

Welch: Yeah that’s the thing, with marketing/promotion, some things can be very precisely measured, but much of it is throw stuff to the wall to see what sticks.

You see that comment on a Macworld article? The Macworld article complaining about MacHeist Twitter spam with a screenshot of the Macworld MacHeist spam email. ;)

I think that actually is a very interesting statement on the duality of intentions here Macworld editors are steamed about Twitter spam. Macworld the company sends out email spam. The Macworld editors argue the nuanced difference between the two.

Manganelli: Although, to be fair, Cohen doesn’t seem to be the one arguing the nuances, even though he would be the one being hypocritical.

Welch: I think there will always be the kind of battle between marketing and personal interests. Twitter is just yet another battleground apparently. BTW, we have slightly different priorities on where our consumer dollars go, you and I. Yours are perhaps better in a way, but for instance, I will not “buy American” — I think it’s pointless.

Manganelli: I’m not particularly wedded to a certain country of origin. Certainly cars, for example, is a good example of this; American cars are usually gas guzzlers. I actually consider myself to be a supporter of globalization. I think that’s where we’re inevitably headed. I just like to know that my dollars are effectively used and go to good causes/people/groups after it leaves my hands.

Welch: The point is that to some people, “buying American” is as important as not buying from someone who supported Prop. 8 is to you. What is being supported/not supported doesn’t matter.

Manganelli: Well, again, functionality and form are definitely at the top of my criteria list when considering purchase. I won’t, for example, buy something extremely shitty just because it’s from a “green” or “nice” organization.

However, if I’m trying to decide between two things with similar functionality and form, and I need another criterion to differentiate between the two, then “green”/”worker-friendly”/”gay-friendly” may be the deciding factor.

Welch: Me, I refuse to buy American anything [on the sole basis that] it’s from this country. That is simple grass roots corporate welfare, and encourages the companies to put out garbage and the unions to continue feasting on the carcass of the dying company. My dollars go to what I consider to be the best product. What better could you do for American companies than force them to make good product, or die?

Manganelli: Oh, absolutely. The “best product” is the first thing I use to decide on which product to purchase. But sometimes you need other criteria because you can’t really tell which is the “best” product.

Welch: I’m more utilitarian, I guess, but I do think that the MacHeist guys earned their money. It looks like our revenue from this sale is about 3 weeks worth of “normal” revenue to us.

Manganelli: I mean, consider this: you have the option of buying car A from salesman A, and you get the exact same deal, price, benefits, and convenience as buying that same car A from salesman B. However, subsequently, you learn that salesman A doesn’t provide health insurance or a living wage to his workers, whereas salesman B does. Do you not use that as a factor at all in considering who to buy the car from?